Kathmandu, December 30
The government has proposed a new piece of legislation that would make it mandatory for bank boards to seek permission from the central bank before relieving their CEO of the position.
The Banking and Financial Institutions Act amendment registered in Parliament puts an end to the board of directors’ prerogative to appoint and sack the bank’s chief executive. According to the provisions laid out in the bill, the board of directors can decide to sack a CEO, but the Nepal Rastra Bank has to approve the decision before it can be implemented.
The prevailing laws state the bank board of directors can hire and fire the CEO by following procedures laid out in the bank’s internal rules. But the new bill, registered in parliament four months ago, aims to change that. The bill, however, has been stuck after Speaker Krishna Bahadur Mahara resigned and parliamentary proceedings stand obstructed.
The bill also proposes changes to laws governing the election of directors. According to the bill, a person with a bachelor’s degree and five years of experience or a master’s degree with three years of experience can only be elected to the board. The prevailing law says that anyone with five years of experience or a master’s degree can be elected to the board.
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